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  • USPS-T-2

    POSTAL RATE COMMISSION WASHINGTON, D.C. 20268-0001

    CLASSIFICATION AND FEES FOR WEIGHT- 1 AVERAGED, NONLETTER-SIZE I BUSINESS REPLY MAIL, 1999 I

    Docket No. MC99-2

    DIRECT TESTIMONY OF

    TIMOTHY D. ELLARD ON BEHALF OF

    UNITED STATES POSTAL SERVICE

  • CONTENTS

    AUTOBIOGRAPHICAL SKETCH ._.._..__.._____ _ _._. ._..........._.._____.. _ . . . .._.__...__.. .._____.___. iii

    I. PURPOSE AND SCOPE OF TESTIMONY .................................................. 1

    Il. THE STUDY DESIGN .................................................................................. 2

    A. Overview .............................................................................................. 2

    6. Some General Cautions.. ..................................................................... 2

    C. The Three Populations Studied.. .......................................................... 3

    I. The CBCIS List ............................................................................. 3

    2. The Non-CBCIS List ..................................................................... 4

    3. The Other List.. ............................................................................. 5

    D. The Study Process ............................................................................... 6

    1. initial Contact. ............................................................................... 6

    2. Information Packet ....................................................................... 6

    3. Follow-up Call and Letter .............................................................. 7

    111. RESULTS ..................................................................................................... 8

    APPENDIX - Use of CBCIS and Discussion of Selection Criteria

    EXHIBIT USPS 2A - Materials for Non-CBCIS Facilities

    EXHIBIT USPS-2B - Screening Questionnaires

    EXHIBIT USPS 2C - Information Pack&

    EXHIBIT USPS 2D - Follow-Up Materials

  • iii

    Direct Testimony Of

    Timothy D. Ellard

    AUTOBIOGRAPHICAL SKETCH

    My name is Timothy D. Ellard. I am a Consultant to Opinion Research

    Corporation International (ORC). I joined ORC at its Princeton, New Jersey

    headquarters in 1964, was named Vice President in 1968 and Senior Vice President

    in 1970. In 1982, I became Manager of ORCs West Coast operations, based in

    San Francisco. In 1991, I returned to Princeton, assuming the role of Chief

    Methodologist. My title was changed to Executive Vice President in 1993. At

    various times, I have also been responsible for ORCs marketing research and

    government research practices.

    In addition to my broad management responsibilities, I have been directly

    responsible for the design, management and reporting of a wide range of large-

    scale survey research projects. Since 1972, I have been in charge of ORCs work

    with the Postal Service. In that period, we have conducted surveys on a variety of

    subjects, covering both household and nonhousehold populations. Recently, I have

    stepped back from general managerial responsibilities, but continue with the

    Company as a Consultant, concentrating on research direction, particularly in

    engagements for the Postal Service.

    I have testified on behalf of the Postal Service in Docket No. R83-1 on the

    subject of market potential for the proposed E-COM service and have appeared as

    a witness in four other cases, No. R90-1, No. MC91-1, No. MC96-3 and No. R97-1.

    In the 1990 and 1997 cases, ORC provided estimates of the nonhousehold markets

  • iv

    reaction to proposed rate changes. In the 1996 case, ORC provided data on post

    office box holder reactions to proposed fee changes, and in the 1997 case provided

    rebuttal testimony on a suggested two-stamp system for First-Class letter mail.

    From 1961 to 1964, I worked in brand management for The Procter &

    Gamble Company in Cincinnati, Ohio. From 1958 to 1961, I was on active duty as

    an officer in the Finance Corps, United States Army Reserve.

    I hold an MBA from the Wharton School of the University of Pennsylvania,

    with a major in statistics and industrial management, and an AB from Harvard

    College.

    Opinion Research Corporation International, founded in 1938, is one of the

    countrys larger survey research organizations. Since 1991, it has been an

    independent corporation and has been publicly traded since 1993.

  • 1

    1 I. PURPOSE AND SCOPE OF TESTIMONY

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    The purpose of my testimony is to sponsor and explain a study conducted on

    behalf of the Postal Service to determine the level of interest in new accounting

    methods and fees for nonletter-size Business Reply Mail (BRM). The quantification

    is in terms of the number of nonhousehold locations and the pieces of eligible mail

    associated with those locations.

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    The proposed new fee structure is described in the testimony of Postal

    Service witness Kiefer (USPS-T-4). Under this proposal, eligible BRM would include

    flats and parcels, as well as letters weighing over two ounces. Recipients of such

    mail would be permitted to opt to pay fees based on a weight averaging approach to

    accounting for BRM postage and fees. In brief, recipients would pay a flat monthly

    fee and a much lower per piece fee than is currently available to them.

    The study results are intended to provide a first estimate of the acceptance of

    the proposed fees.

    15 I will describe both the design and execution of the study and then present

    16 the results.

  • 1 II. THE STUDY DESIGN

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    A. Overview

    The study design is quite straightforward. It involves using information

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    supplied by the Postal Service to identify nonhousehold customers who might be in

    a position to take advantage of the proposed fees. This study was designed to err

    on the conservative side by including prospects who would be less certain to be

    attracted to the new fees because of their relatively low volumes of eligible BRM.

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    There being no single source from which to identify prospects, three sources

    were used, as described below in the section entitled The Three Populations

    Studied.

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    Each identified prospect was contacted by a staff interviewer from ORC and,

    having been identified as an individual familiar with BRM and involved in decisions

    regarding BRM at the location, was introduced to the study. Each confirmed

    prospect was sent a packet of materials describing the proposed classification and a

    range of fee levels, along with a worksheet to calculate their potential saving under

    the possible range of fees. Finally, a follow-up call was made to ascertain the

    17 eligible volume each confirmed prospect reported and their interest in taking

    18 advantage of the proposed classification.

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    6. Some General Cautions

    In reading this study, it is necessary to keep in mind Ihat it is not a statistical

    study, an experimental analysis, an econometric study, or a computer analysis. It is

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    a carefully planned and executed search among prospects who might be likely to

    take advantage of the proposed fees.

    The study results are presented in such a manner as to protect the

    confidentiality of respondents who, in providing volume data, have revealed

    information that is often of great commercial value to them. In collecting such

    information, we have assured our respondents that it will be held in strict confidence.

    Therefore, every effort has been made to provide useful study results without

    disclosure. The small number of prospects leads to a situation in which even simple

    cross tabulations of results would lead to disclosure.

    C. The Three Populations Studied

    The three populations approached for this study may be described as the

    CBCIS list, the non-CBCIS list and the other list.

    1. The CBCIS List

    The Postal Service Corporate Business Customer Information System

    (CBCIS) maintains certain records at the customer and post office tevel. Among the

    records kept are volume and revenue data for individual BRM permits. For

    purposes of this study, the CBCIS database for fiscal 1998 was searched first for

    customers paying the IO-cent per-piece BRM fee and receiving an annual volume of

    more than 75,000 pieces in the same location. From this subset of customers, a

    second search identified those that showed an average ann.ual revenue per piece

    (revenue divided by volume) of 53 cents or more for fiscal 1998.

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    12 2. The Non-CBCIS List

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    Use of the CBCIS system for collecting information on BRM revenue and

    volume is in the process of being expanded and, at the time of this study, this ideal

    information source did not cover BRM at all post offices. Therefore, it was

    necessary to deveiop a way to study the post office population not using CBCIS for

    BRM.

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    To approach the non-CBCIS post office population, the Postal Service first

    identified all finance numbers not using CBCIS for BRM information and then

    examined the Postage Due revenue for each. Postage Due revenue includes, but is

    not limited to BRM revenue. A finance number with Postage Due revenue usually

    represents a post office or, occasionally, more than one post office. A hurdle of

    Both these hurdles were set intentionally low. The owner of a permit showing

    a per piece revenue of 53 cents might possibly be receiving eligible mail, but all of

    such mail would have to be eligible to produce this average. Moreover, an owner of

    such a permit with 75,000 pieces of eligible mail would need many more pieces to

    reach the break-even point for changing to the proposed fees.

    The Appendix provides details on CBCIS, the 53-cent cutoff, and the

    economic break-even points for the range of proposed fees studied.

    The search of the CBCIS identified 59 organizations which met the criteria

    set. The mean number of pieces in the permits associated with these locations was

    just over 300,000 and of these locations, 22 received more than 150,000 qualifying

    pieces annually.

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    $50,000 in annual Postage Due revenue was set. At a per piece average revenue

    of 53 cents, this would represent a single permit of approximately 100,000 pieces.

    This is a hurdle that is set intentionally low so as to maximize the opportunity for

    encountering potential users of the proposed rates.

    Ninety-four such finance numbers were identified. Representatives of each

    were called and asked if they had any customers who received large amounts of

    eligible BRM. Those who said they had such customers or were not sure if they had

    such customers, were sent supporting information and a form to complete. Eight-

    nine post offices responded and identified 16 prospects.

    The forms used for the post office search are included as Exhibit USPS-2A.

    3. The Other List

    The Postal Service also identified a small number of prospects that did not

    appear in the systematic searches. Our first step in examining these prospects was

    to determine why they were not identified in the systematic searches of the CBCIS

    and non-CBCIS populations. Some turned out to be relative newcomers to CBCIS

    who did not have the full years volume needed to reach the specified minimum

    volumes. One participant in the current experiment had revenue entered into an

    account other than that for their regular BRM permit. We went through the

    screening process with 7 of these other prospects.

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    15 2. Information Packet

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    D. The Study Process

    1. Initial Contact

    Opinion Research Corporation first tried to telephone each prospect identified

    in the three sources described.

    The initial contact covered a brief description of the purpose of the study,

    confirmation that we were speaking with a person who was familiar with eligible

    BRM at the location and involved in decisions regarding such BRM, confirmation of

    the presence of a sufficient amount of eligible BRM and a request for permission to

    send the respondent a packet of written material.

    Two slightly different forms were used. One, used for the CBCIS population,

    made reference to the responding organizations volume and revenue figures

    obtained from CBCIS files. The other, used for the non-CBCIS and Other prospects

    did not, of necessity, make reference to such data. The forms are included as

    Exhibit USPS2B.

    We reached 67 prospects, 54 of which confirmed that they had at least

    75,000 pieces of eligible BRM annually. Each was sent a packet of materials that

    described the proposed fees for both manifesting and weight averaging in some

    detail, showed two possible rate levels for each approach, and provided work sheets

    that the respondent could complete in order to see if the organization might realize

    savings in BRM fees under the proposed plans. Additionally, respondents from the

    CBCIS list, for which such data were available, received some information on the

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    Postal Service revenue and volume data that they might compare with their own

    records.

    The information packet is included as Exhibit USPS-2C.

    3. Follow-up Call and Letter

    Each respondent who received a packet was then called back to discuss their

    experience with the work sheets and their intention to take advantage of the

    proposed fees. Respondents who did not return the forms were called to

    encourage them to do so. Those who did not respond were sent a letter

    encouraging their cooperation. The materials for this phase are included in Exhibit

    USPS-2D.

  • III. RESULTS

    Twenty-one respondents completed the process and 10, representing 11

    sites and a total of 15.8 million pieces of mail annually, said they expected to take

    advantage of the proposed fees. The 11 sites were in five industries: film

    processing, insurance, market research, retail chains, and state disability agencies.

    All expected to use weight averaging. None was interested in manifesting. None

    reported intent to switch non-BRM to BRM to take advantage of this classification.

    Film processors comprise the group that will furnish the greatest volume of

    eligible Business Reply Mail under the proposed fees.

  • APPENDIX USE OF CBCIS AND DISCUSSION OF SELECTION CRITERIA

    Discussion of use of Corporate Business Customer Information System (CBCIS).

    Criteria for selecting mailers who may be interested in the proposed fee structure from the CBCIS database.

    Rationale for setting selection criteria.

  • Appendix, page 1

    No single data source is currently available to identify all BRM customers.

    This appendix describes how the Postal Service identified potential customers

    far the experimental set-vice using the Corporate Business Customer information

    System (CBCIS).

    CBCIS contains revenue and volume data on a customer-by-customer

    and postal facility-by-postal facility basis. CBCIS incorporates BRM data

    originating from the Postal Services PERMIT database. Customers potentially

    interested in the proposed fee structure are among those who paid an

    accounting fee of 10 cents per piece in 1998. Such customers are maintaining

    an advance deposit account, but did not qualify for the Business Reply Mail

    Accounting System (BRMAS) fee of 2 cents per piece.2 Approximately 50

    percent of the BRM volume subject to the IO-cent per-piece ERM fee was

    included in the PERMIT database in 1 998.3 While this figure is indicative of the

    broad coverage of the database, it is not intended to imply any direct relationship

    to coverage of eligible BRM.

    To identify customers who may be interested in the new fee structure

    (among customers paying the 10 cent per-piece BRM fee), a minimum volume

    requirement was imposed because a BRM recipient needed to have at least one

    This fee was reduced to 8 cents per piece on January 10, 1999. This fee was increased to 5 cents per piece and the service was renamed Qualified Business Reply Mait on January IO, 1999. 3 The percentage of BRM volume paying IO cents per piece that was included in the PERMIT database was as follows: (1) 42 percent inQuarter 1 1998, (2) 51 percent in Quarter 2 1998, (3) 55 percent in Quarter 3 1998, and (4) 50 percent in Quarter 4 1998. l-listorically, the use of the PERMIT database for BRM has been a local option. In 1997, the Postal Service initiated an effort to substantially increase the BRM volume included in PERMIT, and expects the percentage covered to increase over time.

  • Appendix, page 2

    location receiving a substantial volume of BRM annually to make the proposed

    fee structure financially attractive. Comparing total BRM fees paid under the

    existing permanent BRM fee structure with those that would be paid under the

    fee structures tested in the market research, the break-even point in annual

    volume would be approximately 150,000 pieces for the reverse manifest

    method,4 and apprbximately 160,000 pieces for the weight averaging method.5

    To cast a net for potential customers as widely as possible, a threshold

    volume of 75,000 pieces annually was selected rather than the 150,000 -160,000

    pieces implied by the break-even calculation. The lower volume was selected to

    allow for customer volume growth since 1998.

    From the subset of customers meeting the annual volume threshold, a

    second screen was then imposed to identify potential customers. While the

    PERMIT system does identify the BRM fee (e. g.,lO cents or 2 cents) being paid

    by the customer and the volume, it does not include information on what shape

    of mail the customer is receiving. However, mailers receiving nonletter-size BRM

    can be inferred by the average revenue per piece. For example, a customer

    receiving four-ounce flats and maintaining an advance deposit account would

    pay $1 .-I 1 cents per piece in postage and fees in 1998 ($1 .Ol in postage plus a

    BRM fee of 10 cents per piece). This is the type of customer who may be

    interested in the new fee structure.

    4 Calculated by taking the lower reverse manifest fee structure tested of $1,000 per month and 0 cents per piece ($12,000 annually/savings of 8 cents per piece). Calculated by taking the lower weight averaging fee structure tested of $1,000 per month and 0.5 cents per piece ($12,000 annually/ savings of 7.5 cents per piece).

  • Appendix, page 3

    To identify customers who may be interested in the new fee structure, a

    search was made for permits with an average annual revenue per piece in 1998

    of at least 53 cents. The 53-cent minimum was established using the postage

    and fees for a nonstandard flat (32 cents in postage plus 11 cents for the

    nonstandard surcharge plus 10 cents for the BRM fee). An average annual

    revenue per piece of less than 53 cents would be associated with BRM that

    would not be eligible for the new fees.

    The Postal Service provided the resulting list of BRM locations to ORC for

    its market research.

  • EXHIBIT USPS-2A MATERIALS FOR NON-CBCIS FACILITIES

    Materials for cdntacting non-CBCIS postal facilities (those not using PERMIT for BRM reporting) with $50,000 or more in Postage Due revenue.

    Initial phone call to such facilities.

    Faxed follow-up forms and cover sheet

  • USPS-2A, page 1

    Post Office Interviews

    Finance Location:

    Contact:

    Phone Number:

    Hello, Im calling from Opinion Research Corporation International. We are conducting a brief study for the Postal Service.

    The Postal Service is thinking of requesting new fees for large volumes of certain eligible Business Reply Mail. Such eligible Business Reply Mail would include lettersweighing more than two ounces, parcels and flats.

    Postal Service records show that your Finance Number reports more than $50,000 in Postage Due revenue. Postage Due Revenue includes Business Reply Mail revenue.

    Are you the person who can tell us if you have any accounts which are large volume receiversof 1 eligible Business Reply Maif? A large volume receiverwould get at Ieast75,OOO piecesannually, an

    average of about 1500 pieces per week. We understand that handling that many pieces of eligible BRM is usually a very visible task, even in large postal facilities.

    ONCE YOU HAVE REACHED THE CORRECT PERSON

    Name:

    Title:

    Phone Number:

    Extension:

    1. Do you have one or more large customers for eligible BRM?

    2.

    1 YES + ASK QUESTION 2 2 NO + THANK AND TERMINATE 3 DONT KNOW + SKIP QUESTION 2 AND GO ON TO NEXT PAGE

    How many such customers do you have?

    ENTER NUMBER

    We would like to interview large volume customers for eligible BRM as part of a filing for new fees.

    We would like to know the following information: READ LIST FIRST TO LET RESPONDENT KNOW WHAT WENEED.

    Account Name:

  • USPS-2A, page 2

    Permit Number:

    A general description of the mail received (content/shape/other details):

    Approximate number of pieces received for fiscal 98:

    Approximate revenues for fiscal 98:

    Customer Contact Name:

    Customer Contact Telephone:

    We can continue this interview now or 1 can call back for this information. Or, if you would like, I can fax or Express Mail a form for you to complete and send back.. The form we will send includes a letter from Donald OHara, Manager Classification and Product Development at Postal Service Headquarters. It includes a phone number you may call if you have any questions about this study.

    IF RESPONDENT WISHES TO PROVIDE DETAILS OVER THE PHONE, IMMEDIATELY, OR LATER, USE THE FAX FORM TO RECORD INFORMATION.

    FOR RESPONDENTS WHO DONT KNOW IF THEY HAVE SUCH A CUSTOMER AND WONDER WHY THEY ARE GETTING THE FORM, TELL THEM THEYLL HAVE A CHANCE TO REVIEW THE MATERIAL AND THEN, IF THEY DO NOT HAVE ANY SUCH CUSTOMERS, THEY MAY SIMPLY CHECK A BOX AND SEND THE MATERtAL BACK.

    VERIFY RESPONDENT NAME AND ORGANlZATlON NAME.

    IFBYFAX: Fax Number:

    IF BY EXPRESS MAIL: Address:

    Call Back Time:

    Verify Phone Number;

  • USPS-2A. page 3

    Fax to Post Offices

    Worldwide Headquarters P-0. Box 183 l Princeton, NJ 08542

    Phone (908) 281-3440 . Fax (908) 281-5101

    FAX TRANSMITTAL Name of Location: Phone Number:

    Contact Name: Fax Number:

    Form to identify large volume receivers of ELIGIBLE Business Reply Mail.

    The atiached letter from Donald J. OHara, Manager, Classification and Product Development, at Postal Service Headquarters, describes the study and provides the name of a contact to call if

    you have questions.

    Eligible Business Reply Mail includes letters weighing more than two ounces, flats and parcels.

    A large volume receiver of such items would receive at Ieast 75,OOOO elisible pieces per year, an average of at least 1500 pieces per week (These do not have to all be on the same permit.)

    If there are no large volume receivers of eligible Business Reply Mail at this location, please check this box and return the form to ORC International.

    0 No large volume receivers of eligible Business RepIy Mail at this location.

    If there are large volume receivers of eligible Business Reply Mail at this location, please provide the following information for each one. (The lines marked with stars [I indicate that we do not need this information, but it would be nice to have.)

    If you have some doubt as to whether a customer qualifies, please fill out the form. We can find out more when we call them.

    If you need more pages, please copy the form or U>e a blank sheet for additional entries.

    Thank you.

    Please fax the completed forms to Tim Ellard at 908 281 5101.

  • uws-2A,page4

    CLASSIFICATICJN AND

    PRODUCT DEVELOPMENT

    December 4, 1998

    POSTMASTER SUPERVISOR (POSTAGE DUE)

    SUBJECT: Study of Selected Business Reply Mail (BRM) Customers

    The Postal Service is considering new accounting methods and reduced fees for certain ERM. The BRM that would be eligible for the possible new fees would be parcels, flats, and letters weighing more than two ounces.

    Marketing Systems is interested in surveying customers who have a significant volume (more than 75.000 pieces annually) of eligible l3RM to see if they would be interested in the new fees. We have contracted with Opinion Research Corporation (ORC) of Princeton, NJ to conduct this

    1 survey.

    As explained in the attached material. we need your help in identifying any such BRM customers your facility may be serving. This letter authorizes you to release to Opinion Research the basic customer information requested in the attached material. ORC will only use this information for the purposes of this survey, and individual customer responses wit1 be kept confidential.

    If you have any questions, please contact Jim Kiefer at (202) 2688256. Thank you for your assistance with this research.

    @&W Manager, Classification and Product Development Marketing Systems

    Attachments

    475 CENFANT PLAZA SW

    WASHINGTON DC 20260-2453

  • USPS-ZA, page 5

    USPS Finance Location Page -of-

    Customer Name:

    Address:

    Telephone Number:

    * Customer Contact Name:

    Permit Number:

    l Annual (FY 98) Volume: (An estimate is fine.)

    l Annual Revenue: (Again, an estimate is fine.)

    * What kind of marl IS involved? (Content/shape/other details)

    Customer Name:

    Address:

    Telephone Number:

    l Customer Contact Name:

    Permit Number:

    * Annual (FY 98) Volume: (An estimate is fine.)

    l Annual Revenue: (Again, an estimate is fine.)

    * What kind of mail is involved? (Content/shape/other details)

  • USPS-2A, page 6

    USPS Finance Location Page of-

    Customer Name:

    Address:

    Telephone Number:

    l Customer Contact Name:

    Permit Number:

    * Annual (FY 98) Volume: (An estimate is fine.)

    * Annual Revenue: (Again, an estimate is fine.)

    * What kind of mail is involved? (Contentlshapelother details)

    Customer Name:

    Address:

    Telephone Number:

    * Customer Contact Name:

    Permit Number:

    * Annual (FY 98) Volume: (An estimate is fine.)

    * Annual Revenue: (Again, an estimate is tine.)

    l What kind of mail is involved? (Content/shape/other details)

  • EXHIBIT USPS-2B SCREENING QUESTIONNAIRES

    Screening Questionnaire used for CBCIS population.

    Screening Questionnaire used for Non-CBCIS and Other populations.

    The only difference between the two forms is the mention of permit numbers and volumes in the CBCIS version. Such data were only available for this population.

  • USPS-26, page 1

    SCREENING INTERVIEW FOR CBCIS POPULATION

    (CALL CONTACT 1 FIRST)

    Hello, Im calling for Opinion Research Corporation International. We are conducting a study for the United States Postal Service.

    This study is concerned with proposed new fees for certain Business Reply Mail. The Business Reply Mail that would be eligible for the proposed new fees would be letters weighing more than two ounces, flats, and parcels. Under the proposed fees, organizations receiving larg& volumes of such mail might save on Business Reply Mail fees and, in some cases, receive their Business Reply Mail more quickly.

    Your organization has been identified by the Postal Serviceas one of those that receives a large volume of Business Reply Mail at an average price per piece that indicates that you might be receiving Business Reply Mail that would be eligible for the new fees.

    FOR MULTIPLE LOCATION ORGANIZATIONS ONLY Our records show that has locations that may receive large volumes of eligible Business Reply Mail.

    These locations are

    Record Call Record Below- each call and disposjtion, time for next call, etc.

    This interview is complete after data are received form the respondent and, if appropriate, the materials to be sent have been sent.

  • USPS-26, page 2

    Sl Is there one person in your organization who would be responsible for mailing decisions about 3usiness Reply Mail (ASK: at these locations, IF BRM is received in multiple locations) ?

    I YES 2 NO

    IF YES, 52 Who is that person?

    Name:

    Title:

    Phone #:

    Address, if no phone number:

    THIS IS TO BE THE RESPONDENT FOR ALL LOCATIONS

    IF NO, s3 Who is the person responsible for mailing decisions about 3usiness Reply Mail at this

    location?

    Location:

    Name:

    Title:

    Phone #:

    IF CURRENT RESPONDENT, GO ON. IF NOT, ASK TO BE

    TRANSFERRED TO APPROPRIATE RESPONDENT.

  • USPS-Z& page 3

    FOR EACH NEW RESPONDENT, REPEAT INTRODUCTION, THEN GO ON.

    The survey is quite brief and is in three parts. In the first pat-l, we will establish that we are speaking with a person who is, in fact, responsible for decisions regarding payment of Business Reply fees and that the organization does receive a substantial volume of Business Reply Mail that would be eligible for the proposed fees.

    Then, well send a written description of the new fees and a worksheet on which you can calculate your fees under the present system and under the proposed fees.

    Finally, Ill call back to ask some questions regarding your reaction to the proposed fees

    The results of the study are expected to be included as part of a filing before the Postal Rate Commission. Your responses to the survey will be aggregated with the responses of others. Individual responses will be treated confidentially.

    If, at any time, you believe we should be speaking with someone else in this organization, please let me know.

    s4 Postal Service records show that you received pieces of potentially eligible Business Reply Mail at an average fee of cents a pjece, including postage, in the 12 months ending in September. By eligible Business Reply Mail, I mean flats, parcels, and letters weighing more than 2 ounces. The permit number(s) for this Business Reply Mail is

    s5 Does this volume seem about right to you?

    1 YES 2 NO

    j GO TO S6. + What do you think the correct figure is?

    S6 I would like to find out more about the shape of this mail. About what % of the total number of eligible pieces is

    Parcels?

    Flats?

    Letters weighing more than two ounces?

    Letters weighing two ounces or less?

    Post cards?

    TOTAL

    Anything else? (Describe)

    (CHECK FOR 100%)

  • USPS-2B, page 4

    s7 Do ail the pieces weigh about the same, or is there a variation in weight? Please explain.

    S8 Do you have other items at this location that are not currently sent as Business Reply Mail , that might be transferred to this type of eligible Business Reply Mail if the fees were more favorable?

    1 YES 2 NO 3 DONT KNOW

    IF THEY ASK ABOUT FEES SAY: They could go from 8 cents a piece, the 1999 fee, to as low as a flat monthly charge of $1,000, with no per piece charge.

    IF YES, s9 About how many additional pieces might become available in an average year?

    ADD TOGETHER THE ANSWERS TO 54 or 55 AND= TOTAL:

    IF THEY EXCEED 75,000 PIECES PER YEAR, GO TO CLOSE 2. IF NOT, GO TO CLOSE I.

    CLOSE 1 Thank you, it would appear that you do not have enough eligible Business Reply Mail to have savings under the new fees, and we do not need to continue with the interview. However, if you would like to proceed to the next step and have us send a description of the fees and a worksheet to calculate potential savings, we will be happy to do so.

    1 INTERESTED 2 NOT INTERESTED

    IF INTERESTED, GO TO SEND THE WORKSHEET.

    IF NOT INTERESTED, SAY: Thank you for your time. That completes the interview for now. I may call you back if our requirements change or we have other brief questions.

    CLOSE 2 It appears that you may have enough eligible Business Reply Mail to lead to savings under the new fees. Ill now send you a description of the proposed fees and a worksheet to fill out to calculate possible savings.

  • USPS-Z& page 5

    SEND THE WORKSHEET

    We can send materials to you by Express Mail, or by fax.

    Which would be most convenient for you? (CIRCLE ONE)

    Express Mail Fax

    Address:

    Fax Number:

    IF BY FAX, 111 be back in touch with you in the next day or so

    IF BY EXPRESS MAIL: Ill be back in touch with you in the next two days or so

    Date and time that the materials were sent.

    BY

  • USPS-2B, page 6

    SCREENING INTERVIEW FOR NON-CBCIS AND OTHER POPUL;L\TIONS

    Hello, Im calling for Opinion Research Corporation International. We are conducting a study for the United States Postal Service.

    This study is concerned with proposed new fees for certain Business Reply Mail. The Business Reply Mail that would be eligible for the proposed new fees would be letters weighing more than two ounces, Rats, and parcels. Under the proposed fees, organizations receiving large volumes of such mail might save on Business Reply Mail fees and, in some cases, receive their Business Reply Mail more quickly.

    Your organization has been identified by the Postal Service as one of those that receives a large volume of Business Reply Mail that might be eligible for the new fees.

  • USPS-2B, page 7

    Sl Is there one person in your organization who would be responsible for mailing decisions about Business Reply Mail (ASK: at these locations, IF BRM is received in multiple locations) ?

    3 YES 4 NO

    IF YES, s2 Who is that person?

    Name:

    Phone #:

    Address, if no phone number:

    THIS IS TO BE THE RESPONDENT FOR ALL LOCATIONS

    IF NO, s3 Who is the person responsible for mailing decisions about Business Reply Mail at this

    iocation?

    Location:

    Name:

    Title:

    Phone #:

    IF CURRENT RESPONDENT, GO ON. IF NOT, ASK TO BE

    TRANSFERRED TO APPROPRIATE RESPONDENT.

  • USPS-2B, page 8

    FOR EACH NEW RESPONDENT, REPEAT INTRODUCTION, THEN GO ON.

    The survey is quite brief and is in three parts. In the first part, we will establish that we are speaking with a person who is, in fact, responsible for decisions regarding payment of Business Reply fees and that the organization does receive a substantial volume of Business Reply Mail that would be eligible for the proposed fees.

    Then, well send a written description of the new fees and a worksheet on which you can calculate your fees under the present system and under the proposed fees.

    Finally, Ill call back to ask some questions regarding your reaction to the proposed fees.

    The results of the study are expected to be included as part of a tiling before the Postal Rate Commission. Your responses to the survey will be aggregated with the responses of others. Individual responses will be treated confidentially.

    If, at any time, you believe we should be speaking with someone else in this organization, please let me know.

    S4-R Does this organizatjon receive elisible Business Reply Mail; specifically, letters weighing more than two ounces, flats, or parcels?

    1 YES 2 NO + TERMINATE, THANK RESPONDENT 3 DONT KNOW -+ ASK RESPONDENTIF THERE IS

    SOMEONE ELSE WHO MIGHT BE ABLE TO ANSWER. IF YES, ASK TO BE TRANSFERRED. 1F NO, THANK RESPONDENTAND TERMINATE.

    .%I-R About how many pieces of etiqible Business Reply Mail do you receive in a year?

    IF NONE, THANK AND TERMINATE.

    IF DONT KNOW, S6-R Is that more than 75,000 pieces a year or less than 75,000 pieces a year?

    1 MORE 2 LESS 3 DONT KNOW

  • USPS-ZB, page 9

    S6 1 would like to find out more about the shape of this mail. About what % of the total number of eligible pieces is

    Parcels?

    Flats?

    Letters weighing more than two ounces?

    Letters weighing two ounces or less?

    Post cards?

    Anything else? (Describe)

    TOTAL ACHECK FOR 100%)

    s7 Do all the pieces weigh about the same, or is there a variation in weight? Please explain.

    S8 Do you have other items at this location that are not currently sent as Business Reply Mail , that might be transferred to this type of eligible Business Reply Mail if the fees were more favorable?

    4 YES 5 NO 6 DONT KNOW

    IF THEY ASK ABOUT FEES SAY: They could go from 8 cents a piece, the 1999 fee, to as low as a flat monthly charge of $1,000, with no per piece charge.

    IF YES, s9 About how many additional pieces might become available in an average year?

    ADD TOGETHER THE ANSWERS TO S5-R or S6-R AND=. TOTAL:

    IF THEY EXCEED 75,000 PIECES PER YEAR, GO TO CLOSE 2. IF NOT, GO TO CLOSE I.

  • USPS-2B, page 10

    CLOSE 1 Thank you, it would appear that you do not have enough eligible Business Reply Mail to have savings under the new fees, and we do not need to continue with the interview. However, if you would like to proceed to the next step and have us send a description of the fees and a worksheet to calculate potential savings, we will be happy to do so.

    3 INTERESTED 4 NOT INTERESTED

    IF INTERESTED. GO TO SEND THE WORKSHEET.

    IF NOT INTERESTED, SAY: Thank you for your time. That completes the interview for now. I may call you back if our requirements change orwe have other brief questions.

    CLOSE 2 It appears that you may have enough eligible Business Reply Mail to lead to savings under the new fees. Ill now send you a description of the proposed fees and a worksheet to fill out to calculate possible savings.

    SEND THE WORKSHEET

    We can send materials to you by Express Mail, or by fax.

    Which would be most convenient for you? (CIRCLE ONE)

    Express Mail Fax

    Address:

    Fax Number:

    IF BY FAX, Ill be back in touch with you in the next day or so.

    IF BY EXPRESS MAIL: Ill be back in touch with you in the next two days or so.

    Date and time that the materjals were sent

  • EXHIBIT USPS-2C INFORMATION PACKET

    Materials sent to qualifying locations, as identified in screening interviews.

    The final page, with volume data for known permits was sent to only the CBCIS population.

  • USPS-X, page 1

    Worldwide Headquarters P.O. Box 183 - Princeton, NJ 08542

    Phone (908) 281-3440 * Fax (908) 281-5101

    FAX TRANSMITTAL

    Name: Phone Number:

    Organization: Fax Number:

    Thank you for participating in our study of large-scale recipients of Business Repty Mail that consists of letters weighing more than two ounces, parcels or flats.

    Following are:

    l A brief description of the proposed fee structure for such mail. l Worksheets to calculate potential savings with the proposed fees.

    l A listing of BRM permits held by your organization for which large volumes of eligible BRM (parcels, flats, and letters over 2 ounces) were received in the 12 months ending in September $998. (The Postal records might not include all your eligible BRM. Please be sure to include as much mail as you believe you might receive under the proposed fees when you complete the worksheets.)

    Please complete the forms and immediately fax, or Express Mail them back to Mr. Etlard at ORC International. His fax is (908) 281-5101, An Express Mail label is enclosed if you wish to use it.

    Well call you back again in a day or so.

    If you have any questions, please call Mr. Ellard at ORC International. His direct line is (908) 281-3403. If you reach his voice mail, leave a detailed message including your respondent number (below) and telephone number and he will return your call.

    -This paragraph was used for only the CBClS population

  • USPS-2C, page 2

    Description of Proposed Fees for Eligible Business Reply Mail

    The Postal Service is considering two methods of streamlining the calculation of postage and fees for certain eligible Business Reply Mail (BRM). Eligible Business Reply Mail would be parcels, flats, and letters weighing more than 2 ounces. At present, such BRM is often processed manually, with Postal Service employees calculating the postage and fees for each piece of BRM individually.

    Both of the streamlined methods have been developed to make it less expensive for the Postal Service to calculate the postage and fees due. Both methods may also allow the Postal Service to refease BRM to the recipient more quickly.

    Weight Averaging The first method the Postal Service is testing is weight averaoinq. Under this method, the Postal Service periodicalIy determines the average postage due per pound of a recipients BRM. Each day, the Postal Service weighs the recipients BRM to determine the total pounds for the day. The Postal Service then applies the average postage due per pound of BRM to the total number of pounds to calculate the postage and fees due for the day.

    Manifest Method The second method is the manifest method. Under this method, the BRM recipient performs the calculation of postage and fees for each incoming piece. For example, the recipient may have an existing order entry system that could be used to generate a manifest of BRM pieces received for the day. To ensure the accuracy of the BRM recipients postage calculation, the Postal Service would periodically sample the recipients incoming BRM and then later find the sample pieces on the recipient- generated manifest to verify that the postage and fees were correctly computed.

    Fees At present, the per-piece fee for BRM of this type is 10 cents when the customer maintains an advance deposit account. In January 1999, this per-piece fee will decrease to 8 cents per piece.

    The fees the Postal Service is thinking about for the two methods fall within the range described in the following table. Because the actual fees have yet to be specified, you will be asked to calculate savings at two levels. lt is likely that the actual fees to be proposed will fall between these two levels.

    In brief, the charges for the proposed fee structure include per-piece charges and a monthly fee.

    Per piece fee Monthly Fee Annual Permit Fee

    1999 Fees Proposed Fees Manifest Weight Averaging

    $0.08 - Lowest Highest Lowest Highest None None $0.005 $0.01

    None $1 ,ooo.oo $2,000.00 $1 ,ooo.oo $1,500.00 $100.00 $-l00.00 $100.00 $100.00 $100.00

  • USPS-2C, page 3

    Comparison Worksheets

    By tilling out the following worksheet(s) you can calculate if you might save under the proposed fee structure and, if so, how much. In deciding which worksheet to complete, you should first ask whether you believe your organization maintains records that would permit you to use the manifest method. If it does, please fiil out worksheets for both manifesting and for weight averaging. Otherwise, please complete only the weight averaging worksheet.

  • USPS-2C, page 4

    INSTRUCTIONS FOR WORKSHEETS

    NOTE: ALL FEES REFER ONLY TO BUSINESS REPLY MAIL FEES AND DO NOT INCLUDE POSTAGE FOR EACH PIECE. THE POSTAGE CHARGE WILL NOT CHANGE UNDER THE PROPOSED APPROACH.

    Instructions for Manifest Worksheet

    1.

    2,

    3* 4.

    5.

    4.

    2.

    3.

    4.

    5.

    Add up the number of all eligible pieces of Business Reply Mail that you expect to receive in a year. Enter the total in Line 1. Column A. There are no per piece fees in this proposed approach, so you do not enter anything in Columns B and C. Eligible mail includes flats, parcels and letters weighing more than two ounces. You may combine mail sent under separate permits, but all the mail must be processed at a single Postal Service facility to be processed for a single monthly fee. Multiply the total number of pieces in Line 1, Column A by the per piece fee

    in Line 2, Column A and enter the result in Line 3, Column A. No entries

    should be made in Columns B and C.

    Add the amounts in Lines 3 and 6, Column A and enter the result in Line 7, Column A. Subtract the total fees shown in Line 7, Column B from the total fees shown in Line 7, Column A and enter the result in Line 8, Column 6. Subtract the total fees shown in Line 7, Column C from the total fees shown in Line 7, Column A and enter the result in Line 8, Column C.

    Instructions for Weight Averaging Worksheet

    Add up the number of all eligible pieces of Business Reply Mail that you expect to receive in a year. Enter the total in Line 1 in all three columns. Eligible mail includes flats, parcels and letters weighing more than two ounces. (for comparison purposes you should have the same volume of mail in each column.) You may combine mail sent under separate permits, but all the mail must be processed at a single Postal Servicefacility to be processed for a single monthly fee. Multiply the total number of pieces in Line 1, Column D by the per piece fee in Line 2, Column D and enter the result in Line 3, Column D Repeat this step for Columns E and F. Add the amounts in Lines 3, 5 and 6, Column D and enter the result in Line 7, Column D. Repeat this step for Columns E and F. Subtract the total fees shown in Line 7, Column E from the total fees shown in Line 7, Column D and enter the result in Line 8, Column E. Subtract the total fees shown in Line 7, Column F from the total fees shown in Line 7, Column D and enter the result in Line 8 of Column F.

    PLEASE RETURN THE COMPLETED WORKSHEETS TO ORC INTERNATIONAL AS SOON AS POSSIBLE.

  • USPS-2C, page 5

    RESPONDENT NUMBER MANIFEST WORKSHEET

    Complete this form only if you maintain computer records of each piece received

    1. Annual Number of Pieces of Eligible BRM

    (Add up the number of all eligible pieces of BRM

    you receive in a year and enter the total here.)

    2. Per Piece Fee

    3.

    4.

    5.

    6.

    7.

    8.

    Total Piece Fees (Multiply Line 1 by Line 2 and enter the total here.)

    Monthly Fee

    Monthly Fee x 12

    Annual Permit Fee

    Total Annual Fees (Add Lines 3,5 and 6 and enter the total here.)

    Total Savings (Subtract Line 7. Columns B akd C from Line 7, Column A and enter the resu11.s here.)

    (A)

    1999 Fees

    $0.08

    $0.00

    $0.00

    $100.00

    I

    (B)

    Lowest Proposed Fees

    NIA NIA

    None

    NIA

    $1,000.00

    $12,000.00

    $100.00

    $12,100.00

    69

    Highest Proposed Fees

    None

    N/A

    $2,000.00

    $24+000.00

    $100.00

    $24,100.00

    PLEASE RETURN BOTH WORKSHEETS TO ORC INTERNATIONAL WHEN YOU ARE FINISHED. (AND BE SURE TO KEEP A COPY FOR YOURSELF.)

  • WEIGHT AVERAGING WORKSHEET RESPONDENT NUMBER

    USPS3C, page 6

    Complete this form even if you expect to use manifesting

    1999 Fees Lowest Proposed Fees Highest Proposed Fees

    1. Annual Number of Pieces of Eligible BRM (Add up the number of all eligible pieces of BRM

    you receive in a year and enter the total here.)

    2. Per Piece Fee

    3. Total Pieie Fees

    (Multiply Line 1 by Line 2 and enter the total here.)

    4. Monthly Fee

    5. Monthly Fee x 12

    6. Annual Permit Fee

    7. Total Annual Fees (Add Lines 3, 5 and 6 and enter the total here.)

    8. TotaI Savings (Subtract Line 7, Columns E and F from Line 7, Column D and enter the results here.)

    $0.08

    $0.00

    $0.00

    $100.00

    $0.005

    $1 ,ooo.ooo

    $12,000.000

    $100.000

    $0.01

    $1,500.00

    $18,000.00

    $100.00

    PLEASE RETURN BOTH WORKSHEETS TO ORC INTERNATIONAL WHEN YOU ARE FINISHED. (AND BE SURE TO KEEP A COPY FOR YOURSELF.)

  • USPS-ZC, page 7

    Organization:

    BRM permits showing high volume and high average revenue per piece for Postal Fiscal Year 1998 (September 16. 1997-September 15, 1998).

    Permit No. Postal Location Pieces Revenue Revenue per

    Piece

    This page sent only to CBCIS population.

  • EXHlBtT USPS-2D FOLLOW-UP MATERIALS

    The final interview form.

    Follow-up letter.

  • USPS-ZD, page 1

    RESPONDENT NUMBER

    CALL BACK INTERVIEW

    Hello, Im calling back to continue our conversation on Business Reply Mail.

    B1 Have your reviewed the materials and completed the worksheets we sent?

    1 YES 2 NO

    IF NO, While this is a brief interview, it is best done after youve gone through the materials. May I call you again at about this time tomorrow?

    SET A MUTUALLY AGREEABLE TIME FOR THE CALL BACK.

    B2 We sent you some information from Postal Service records that showed one or more of your permits received a large volume of potentially eligible BRM last year.

    Did you consider all of this volume in calculating potential savings under the new fees?

    1 YES 2 NO

    -3 SKIP TO B4 + GO TO B3

    IF NO, 83 Why did you not consider all of this volume to fall under the proposed fee structure?

    GO ON TO B4

    B4 Did you add any volume that was not covered by the information we sent that you believed would also be appropriate for the proposed fees ?

    I YES 2 NO

    + GO TO B5 --+ SKIP TO B6

  • USPS-ZD, page 2

    IF YES, 3.5 What is in that additional volume? How is it being received now?

    PROBE FOR CARRIER, SIZE, VARIATIONS IN WEIGHT, SHAPE.

    GO ON TO B4

    B6 Now lets go on to the worksheets you filled out. You completed (both the manifest and the weight averaging worksheets) (the weight averaging worksheet only). Is that correct?

    I YES 2 NO

    IF COMPLETED MANIFEST, GO ON. 1F NOT, SKIP TO WEIGHT AVERAGING.

    67 How many pieces of eligible Business Reply Mail per year did you assume in making your calculations? (If we have the worksheet we will know and can say I see that you assumed an annual average of pieces of eligible BRM. _. .)

    B8 Would the manifest method require any changes in your accounting systems or mail flow?

    1 YES +GOTO39 2 NO + SKIP TO 310 3 DONT KNOW + SKIP TO BIO

    IF YES, I39 Please explain.

  • USPS-ZD, page 3

    BIO About how long do you believe it would take your organization to be ready for manifesting?

    I Less than a month 2 Less than three months T

    d Less than six months Less than a year

    5 A year or more 6 Never 7 DONT KNOW

    B11 Do you believe you would take advantage of the manifest fee if it were available?

    I YES + SKIP TO BI3 2 NO + GOTOB12 3 DONT KNOW + GOTOBlZ

    IF NO, B12 Why do you say that?

    WEIGHT AVERAGING

    NOW, lets look at your worksheet for Weight Averaging.

    Bl3 How many pieces of eligible Business Reply Mail per year did you assume in making your calculations? (If we have the worksheet we will know and can say I see that you assumed an annual average of pieces of eligibIe BRM.. . .)

    B14 Do you believe that you would take advantage of the weight averaging fee if it were available?

    1 YES 2 NO 3 DONT KNOW

    + SKIP GO CLOSE + GOTOBIS + GOTOB15

  • USPS-ZD, page 4

    IF NO OR DONT KNOW, B15 Why do you say that?

    CLOSE

    This completes the interview.

    Thank you very much.

  • USPS-2D, page 5

    OPMION F&smmx Cowaz.4TIoN INTERNATIONAL VIA FAX

    )

    Fax No.: